Cogstate Ltd
Recovery expected in full year: Cogstate Ltd (ASX: CGS) is a cognitive science company, which provides computerized cognitive tests for clinical trials, academic research, healthcare, and brain injury applications primarily in Australia, United States, and Europe. It operates three business verticals i.e., Clinical Trials, Academic Research, and Healthcare. Recently, the group has established a centre of excellence to provide selection and administration of behavioural outcome measures in rare disease and paediatric clinical trials. This will be led by Pam Ventola, PhD, who will apply scientific experience in paediatric neuropsychology and developmental and genetic disorders to drive the implementation of Cogstate’s centre of excellence. During the first half of the year, the company posted revenue de-growth of 4.5% YoY to 13.40 Mn from $14.40 Mn in 1HFY17 due to timing issue. Despite this, the company has signed $21.6 Mn of new sales contracts during the first half of the year which is slightly down from the previous corresponding period. Loss after tax amounted to $1.28 Mn in 1HFY18 against the profit of 0.70 Mn in 1HFY17.
In May 2017, Cogstate was chosen to support all Alzheimer’s disease trials for Eli Lilly. This will support to expand customer base resulting into topline growth of the company. Besides, new technology infrastructure is on track for delivery in Q4FY18 which will help to improve operational efficiency in years to come. Recently, CGS has been removed from All Ordinaries S&P/ ASX Index effective March 19, 2018, as per the latest S&P Dow Jones Indices rebalance. CGS stock has fallen 15.8% in past six months but was up by 4.43% in past five days as on April 06, 2018. Based on growth in contracted revenue backlog, the group may witness some improvement in performance. We keep a watch on the stock while give an “Expensive” recommendation at the current price of $ 0.830.
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Clinical Trial Sales Contracts (Source: Company Reports)
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